Assets = Liabilities + Stockholders' Equity Accounts Accounts Common Fees Rent Supplies Expense - Expense - Expense Salaries Auto Misc. Cash + Receivable + Supplies = Payable + Stock Dividends + Earned - Expense Expense
Transactions
On April 1 of the current year, Morgan Jones established a business to
manage rental property. She completed the following transactions
during April:
a. Opened a business bank account with a deposit of $60,000 in exchange
for common stock.
b. Purchased office supplies on account, $1,800.
c. Received cash from fees earned for managing rental property, $22,300.
d. Paid rent on office and equipment for the month, $7,000.
e. Paid creditors on account, $1,100.
f. Billed customers for fees earned for managing rental property, $3,600.
g. Paid automobile expenses for month, $750, and miscellaneous
expenses, $1,000.
h. Paid office salaries, $4,000.
i. Determined that the cost of supplies on hand was $250; therefore, the
cost of supplies used was $1,550.
j. Paid dividends, $5,000.
Instructions
1. Indicate the effect of each transaction and the balances after each
transaction, using the following tabular headings: (attached)
2. Briefly explain why issuing common stock and revenues increased
stockholders' equity, while dividends and expenses decreased
stockholders' equity.
3. Determine the net income for April.
4. How much did April's transactions increase or decrease stockholders'
equity?
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